The Supreme Court on August 26 asked the central government to take a stand on a waiver of interest in loan repayments during the moratorium.
A petition had been filed to the SC, asking for some portion of an RBI notification issued on March 27 to be cancelled so that interest on loan repayments during the moratorium could be waived. The petitioners said that the interest on loan repayment creates hardship, hindrances and objection in right to life guaranteed under the Constitution.
Lawyer Kapil Sibbal appearing for the petitioners said that the moratorium period will end on August 31 and asked for its extension. As on August 31, people who have taken loans will be in default if the extension is not granted.
The Reserve Bank of India (RBI) had earlier informed the Supreme Court that such a waiver on interest on loan repayments during the moratorium cannot be granted, as such a move would put the financial health and stability of banks at risk.
Responding to this, the Supreme Court said that the government cannot hide behind the RBI anymore, and asked it to make its stand clear by September 1.
The government argued that waiving interest on loan repayments would hit businesses and banks, but the Supreme Court reacted sharply to this argument.
The Supreme Court said that the government cannot be interested only in business and not about the sufferings of the people. The Supreme Court also pointed out that the entire problem has been created by the centre’s lockdown, which shut down the entire country. The Supreme Court said that the government has ample powers under the Disaster Management Act to grant this waiver on interest and that this is not time to consider the interests of business over the plight of people.
The Supreme Court has asked the government to make its stand clear on two things. First, whether the Disaster Management Act will be used, and second, whether the interest on interest for deferred loan repayments will be accounted for.